There finally looks to be some sign of hope for the ailing computer software market, at least if the latest predictions from market research group Key Note are to be believed. It predicts a 21.4 percent growth in sales between 2004 and 2008.

The news will be welcomed by software manufacturers and resellers, which saw virtually no growth in market value last year and forecasts for this year predicting a rise of just 2 percent. If the 21 percent increase is actually met then by 2008 the market will be worth £9.04bn — a healthy rise from 2004's estimated £7.44bn.

"Major clients have tended to take a hard-nosed look at the value of new software and have only committed to purchase on the basis of return on investment," says Key Note's Simon Taylor. "Where there is demand for product it is being driven by e-business."

Pirated software is also having an adverse effect on sales. According to the BSA (Business Software Alliance) global piracy has risen by 25 percent since 2001, while last year 26 percent of software in the UK was pirated. This was the first recorded increase since 1994.

"Tighter IT budgets have contributed to the growth [in pirated software] as IT departments often see under-licensing as a potential source of cost cutting without affecting performance and profitability," says Mark Floisand, chairman of the BSA.

But despite this growth in privacy, an increase in investment from the public sector is forcing the market to gather pace. In the UK, the education and public sector invested 1.3 percent more in software last year then in 2000.